By Nicole GroveChange is inevitable and never easy. Most recently, we’re seeing the challenges presented by the COVID-19 pandemic and recognize the role technology plays not only in facing that challenge, but in coming out on the other side stronger than before.
The pandemic has brought the future forward, affecting the way financial institutions do business, from forcing closures of physical bank branches to sending employees home to work remotely—many for the first time in their careers. As community banks continue to face the daily challenges of adapting to a new normal, cloud technology is playing a critical role in supporting new ways of doing business and enabling financial institutions to accelerate through change.
Facilitating remote operations and maintaining oversight
One function where the cloud presents crucial advantages to financial institutions in the current moment is internal or back-office operations. When stay-at-home orders proliferated across states and nations, banks had to find new ways to make functions work remotely that had, until then, been performed exclusively on-premise. Cloud-based systems make it easier for employees to access critical applications remotely. In particular, cloud-based platforms are better equipped than legacy on-premises IT to provide device-agnostic access, allowing employees who need to log in via a remote computer or smartphone to do so.
In addition, systems that operate from the cloud allow financial institutions to better maintain oversight and mitigate risk compared to fragmented older technology that operates from siloed systems that do not readily communicate with one another. For example, modern cloud technology allows administrators to virtually grant accessibility as needed to essential systems and information.
Accommodating a spike in demand for digital banking services
Perhaps the most substantial advantage the cloud offers banks and credit unions adjusting to a “new normal” is its ability to scale and support the surge in demand for digital banking services. With branches closed and call centers flooded with inquiries, support channels that previously were nice-to-haves are now being viewed as must-haves, in order to support current users and effectively onboard new adopters.
Banks are seeing a significant uptick in the number of account holders looking to connect to their accounts online—including many who have never before used digital services. Particularly as stimulus payments, unemployment benefits, and tax refunds arrive via direct deposit or physical check, account holders are relying increasingly on digital banking to perform transactions and check account balances. According to Fusion Digital Banking’s Real-time End-user Behavioral Analytics engine, remote deposit captures increased by more than 10 percent between January and April, indicating that the amount of money being deposited remotely via digital channels is approximately equivalent to or exceeding the amount coming into branches.
With this growth in demand for digital banking comes the need for financial institutions to accommodate and embrace users of all ages. While Gen X and millennials are stereotypically thought to be more tech-savvy than baby boomers, ABA research indicates that 71 percent of Boomer customers report using online banking services at least once per week. However, only 18 percent of Boomers report using mobile banking.
When it comes to addressing demand for digital capabilities, cloud platform technology enables banks to partner with fintech companies to efficiently implement apps and tools. For example, due to concerns about transmitting the coronavirus through contact with physical payment methods, such as cash or checks, consumers are increasingly using digital payment solutions. Financial institutions that use cloud-based platforms are more easily able to connect with digital payment providers and quickly implement these and other relevant solutions.
Establishing a foundation for tomorrow’s innovations
As more account holders opt into digital banking technology, financial institutions must look ahead to their next challenge: updating their digital offerings to keep pace with evolving expectations.
Cloud technology plays an important role in helping banks and credit unions keep their account holders satisfied and engaged with digital products and services. A cloud-based platform can accelerate innovation by using data for the benefit of functions such as oversight, marketing and others. Most importantly, platforms that feature an open API approach enable fintech firms and financial institutions to collaborate on tools and solutions, and bring them to market quickly and efficiently where they can help credit unions and banks deliver in response to evolving user expectations and strengthen their account holder relationships.
The coronavirus crisis is a once-in-a-lifetime event, but the way banks respond and adapt to its challenges has the potential to forever change the way they do business. Embracing cloud-based technology platforms is one way that community banks can adjust to the “new normal” and position themselves to accelerate innovation and growth after the pandemic has passed.
Nicole Grove is director of account management at Finastra’s Digital Center of Excellence.